How call spread is playing Viacom

More than 15,000 VIAB options have already changed hands this morning, compared to a full-session average of 6,000. optionMONSTER systems show that the volume is dominated by one call spread.

A trader bought 5,000 June 70 calls for the ask price of $1.20 and sold 10,000 June 72.50 calls for $0.50. The volume at each strike is multiples of the previous open interest, clearly indicating new activity.

This vertical spread , also known as a ratio because of the differing number of contracts in each strike, cost just $0.20 to open. That amount is at risk if shares remain below $70, while the the maximum gain comes if VIAB is right at $72.50 at the expiration. The real risk is above that higher strike, where the trader is effectively short shares. (See our Education section)

VIAB is up 0.41 percent to $67.80. This is off the day's peak but would still be a new closing high for the stock. Shares of the media company have run up from support at $48 since mid-November.